Elon Musk opens up Tesla patents to everyone

Tesla Model S

Krisztian Bocsi / Bloomberg

A Tesla Model S 85 electric car is displayed at an automotive trade fair in Leipzig, Germany, in May. Tesla will allow other manufacturers to use its patents to help speed the adoption of electric cars.

A Tesla Model S 85 electric car is displayed at an automotive trade fair in Leipzig, Germany, in May. Tesla will allow other manufacturers to use its patents to help speed the adoption of electric cars. (Krisztian Bocsi / Bloomberg)

Tesla opens up its patents to everyone in a move intended to help speed the adoption of electric cars

Tesla also will open up the technology it is using to build its supercharger network to rapidly recharge cars

Sharing of technology is embedded in the culture of Silicon Valley, where Palo Alto-based Tesla resides

The Tesla Model S just became the world's first open-source car.

Elon Musk, chief executive of Tesla Motors Inc., said Thursday that he was opening up the electric car company's patents to all comers.

"Technology leadership is not defined by patents, which history has repeatedly shown to be small protection indeed against a determined competitor," Musk said, "but rather by the ability of a company to attract and motivate the world's most talented engineers."

The dramatic move — automakers and other businesses usually guard patents jealously — is intended to help speed the adoption of electric cars. Many of the patents relate to electric powertrains and how to integrate them into vehicles, Musk said.

The patents should provide modest help to other automakers without hurting Tesla, he said.

Tesla Model S interior

Krisztian Bocsi / Bloomberg

The dashboard of the Tesla Model S electric car is shown in a vehicle on display at an automotive trade fair in Leipzig, Germany.

The dashboard of the Tesla Model S electric car is shown in a vehicle on display at an automotive trade fair in Leipzig, Germany. (Krisztian Bocsi / Bloomberg)

"We think the market is plenty big enough for everyone," Musk said. "If we can do things that don't hurt us and help the U.S. industry, we should do that."

Tesla also will open up the technology it is using to build its supercharger network — a chain of charging stations to rapidly recharge Tesla cars — that the automaker is building nationwide. Musk said he had already talked to BMW about sharing the network.

Because electric cars are such a tiny market — less than 1% of all vehicles sold in the U.S. — Tesla sees little threat from the current batch of electric competitors.

"Our true competition is not the small trickle of non-Tesla electric cars being produced," he said, "but rather the enormous flood of gasoline cars pouring out of the world's factories every day."

Sharing of technology is embedded in the culture of Silicon Valley, where Palo Alto-based Tesla resides. The open-source software movement has evolved over the last four decades, giving rise to systems such as the Linux operating system and the Mozilla Firefox Web browser, which can be freely customized and distributed.

But allowing others to use its patents, which are already public, isn't exactly opening the keys to Tesla's kingdom, said David Cole, an analyst who heads AutoHarvest Foundation, a nonprofit in Detroit that fosters technology transfer in the auto industry.

Tesla will continue to protect its trade secrets and processes, he said.

"Tesla is sure to have figured out some things along the way that they have not patented," Cole said. "They don't want people to see it."

Tesla shares barely moved after the company's announcement. The stock dropped 95 cents, or less than 1%, to $203.52 on Thursday.

Musk is making a smart move, said Craig Irwin, an analyst at Wedbush Securities.

If you open up all your books to everyone, it means you all are fighting a war with the same weapons.- Thilo Koslowski, analyst with Gartner Inc.

"There is no competitive disadvantage," Irwin said. "If anything, it shows confidence that they will maintain a competitive lead over other electric vehicle producers."

Irwin said Tesla is probably surprised that no other automaker has adopted the small cylindrical battery cell technology that has given the company's vehicles double or triple the driving range of other electric cars. Tesla started using the technology in its first model, the Roadster, and more recently in its Model S luxury car.

"They are saying, 'Listen, we are not going to put up roadblocks for people who want to chase us,'" Irwin said.

The move could pay off for the company when it builds the giant battery factories it plans to develop.

"Even if other competitors copy Tesla's design, Tesla still gets to sell them batteries, and that's pretty awesome. Tesla's decision isn't entirely altruistic," said Jacob Sherkow, patent law expert at the Center for Law and the Biosciences at Stanford Law School.

@Poor Richard's Almanack Gas-powered cars will always produce CO2, increasing global warming. Electric vehicles can be charged by renewable energy like solar or wind. You don't have to have a new power plant in your backyard, but you could have solar on your roof. Here in...

Musk's strategy is in line with "the Silicon Valley intelligentsia," who believe that patents are bad because they stifle innovation and creativity and encourage litigation, Sherkow said.

Others believe that Tesla is taking a risk.

"If you open up all your books to everyone, it means you all are fighting a war with the same weapons," said Thilo Koslowski, an analyst with Gartner Inc.

This is especially true with powertrains, battery management and other technology that automakers need to meet fuel-efficiency mandates, Koslowski said. Normally, companies vigorously defend such technology.

Earlier this year, Paice, a Baltimore company that specializes in hybrid-drive technology, filed a lawsuit against Ford Motor Co., claiming that the automaker took its technology for the hybrid and plug-in versions of the Fusion, C-Max and Lincoln MKZ.

High-profile patent battles also rage in other industries.

Apple Inc. and Samsung Electronics Co. have fought an epic litigation battle, involving dozens of lawsuits around the world, alleging patent infringement on both sides. Apple accuses Samsung of copying iPhone features in an attempt to keep pace with the smartphone's success. Samsung alleges that Apple is trying to keep growing competitors underfoot by seeking multibillion-dollar legal judgments.

But in the auto industry, Tesla's move is not entirely without precedent.

In 1959, engineer Nils Bohlin invented the so-called V-type three-point safety belt that has since become a standard feature in cars worldwide, replacing problematic predecessors such as the diagonal two-point belt.

His company, Swedish automaker Volvo, patented the design and immediately made it freely available to rivals. The belt is now considered one of the most significant safety innovations in automobile history and was cited by German patent registrars as one of the eight most important patents for humanity from 1885 to 1985.

Musk, who is also chief executive of Hawthorne rocket builder SpaceX, noted that the aerospace company had "virtually no patents," but its competitiveness in the rocket business is unaffected.

Tesla will allow other manufacturers to use its patents in "good faith" — essentially barring those users from filing patent-infringement lawsuits against the electric car company or trying to produce knockoffs of Tesla's cars.

Musk cited two prime motivations for the move.

Opening up Tesla's technology could increase sales of electric cars and move the world away from oil-burning vehicles that contribute to global warming.

"I don't think people quite appreciate the gravity of what is going on," Musk said. "We need to do something. We would be shortsighted at Tesla if we kept these things close to our vest."

He also believes that the patent system needs reform.

Tesla will continue to seek patents for its new technology to prevent others from poaching its advancements and then filing their own patents as a "blocking maneuver." But those future patents will also be open to anyone willing to follow Musk's "good faith" guidelines.

Tesla isn't the first Tesla willing to share patents.

The automaker is named for inventor Nikola Tesla. In 1907, Tesla's alternating current technology was being licensed by Westinghouse Electric & Manufacturing Co. Tesla sold Westinghouse his patents for a $216,000 lump sum — less than 2% of what they were said to be worth — to help the company defend Tesla's technology from Thomas Edison and his direct current technology.

Westinghouse survived. But it didn't turn out well for Tesla, who died penniless in a small New York hotel room in 1943.